China's central bank raised the reserve ratio for commercial banks by 0.5 percentage points Friday in the latest government move aimed at curbing inflation, according to dpa. The People's Bank of China said it would raise the required reserve ratio by 50 basis points from January 20. The rise will mean major banks must reserve a minimum of 19 per cent of their deposits while smaller ones should retain 15.5 per cent. The bank said the tightening measure was expected to withhold some 350 billion yuan (53 billion dollars) of the banks' liquidity. The central bank raised the reserve ratio six times last year in a bid to curb lending amid rising consumer price inflation, which hit a 28-month high of 5.1 per cent in November. On December 26, it also raised the benchmark one-year lending rate by 25 basis points to 5.81 per cent and the one-year deposit rate by 25 points to 2.75 per cent. That interest-rate hike followed the central bank's raising of interest rates in October for the first time since 2007. At an economic conference in early December, the government said it planned to move from a "relatively loose" to a "prudent" monetary policy this year. Premier Wen Jiabao said in late December that he was confident government measures would succeed in curbing soaring food and property prices. Wen conceded that policies introduced last year to limit property price rises were "not well implemented." He said the government planned to develop more affordable housing and try to stem the flow of credit to property speculators. Analysts said they expected inflation to continue at around 4 to 5 per cent in 2011.
